Situation
Initially engaged to help them enhance firm profitability, we were subsequently retained by an East Coast digital marketing agency to advise them on a potential acquisition. The client made it clear that they had one firm goal in mind—to become the undisputed leader in their field within 5 years, and tee the firm up for an eventual sale. And they believed that a roll-up strategy was the fastest way to achieve that goal.
The TobinLeff Solution
In assessing the initial deal, we structured and presented an offer to the seller based upon a lower overall value, and with a lower degree of risk, than the client originally thought they had to pay for the business. The seller accepted the terms of the deal, which consisted of an upfront payment and a performance-based earn-out, and our client added over $1 million to their top line, plus additional talent and capabilities. Over the next several years, our client brought us three more acquisitions to place a value on, structure offers for, negotiate with the sellers, and assist with due diligence, including a leading West Coast agency that gave our client access to prestigious high-tech clients. While the terms and conditions for each of the deals varied considerably, they were all designed to minimize financial risk for our client while offering the seller the opportunity to participate in future upside growth. As a result of the four acquisitions and organic growth, the business has quadrupled in size, and our clients are well on their way to achieving their vision.
Listen to the TobinLeff M&A Podcast or contact the TobinLeff team to learn more about roll-up strategy.
